A writer must “know and have an ever-present consciousness that this world is a world of fools and rogues… tormented with envy, consumed with vanity; selfish, false, cruel, cursed with illusions… He should free himself of all doctrines, theories, etiquettes, politics…” —Ambrose Bierce (1842-1914?). “The nobility of the writer's occupation lies in resisting oppression, thus in accepting isolation” —Albert Camus (1913-1960). “What are you gonna do” —Bertha Brown (1895-1987).

Monday, December 8, 2014

"Ignorance Is Biss"

“I spent the last two years
working to pass the Secure Choice Retirement Savings Program in Illinois, [and
the last three years working to pass a bill to diminish and impair public
employees’ and retirees’ contractual benefits and rights that were earned].”

"This is a huge crisis, approaching us with terrifying
speed. If we don’t do something about it, we’ll be facing an epidemic of
seniors living in poverty, with horrific human consequences, not to mention
huge costs to government.

"Fortunately, there are commonsense ways to address this.
That’s why I spent the last two years working to pass the Secure Choice
Retirement Savings Program in Illinois. It creates an automatic enrollment IRA
so that workers without employer sponsored retirement plans still have an easy
way to save for retirement using a payroll deduction and benefiting from low
fees…

"On April 9, we were rewarded: the bill passed the
Senate (with no votes to spare!).A House committee then passed the bill on a bipartisan 7-2 vote, but
unfortunately we ran out of time and weren’t able to round up enough support to
pass the bill out of the House before the end of our spring legislative
session.We were
disappointed, but undeterred…

"Finally, during the final week of the fall veto session,
we were rewarded — the bill passed the House with 67 votes (seven to spare!) on
December 2nd,
and then finally passed the Senate again with 30 votes (none to spare!) on December 3rd.
It’s now heading to Governor Quinn’s desk, and he’s already told me how excited
he is to sign it.

"It’s been a joy and an honor to work on this project, and
especially to work on it with so many dedicated, passionate, tenacious
advocates. Literally millions of Illinois workers will now have a better shot
at a dignified, secure retirement.

"This process has reminded me that with patience and
persistence, we can make the world a better place and improve lives. I feel
incredibly fortunate to hold a position in the State Senate that allows me to
try to do that every day, and I promise to do the best I can to live up to that
possibility."

Best,
Senator Daniel Biss
9th District – Illinois

On
Illinois Senate Bill 1/ Breaking a Constitutional Contract with Public
Employees and Retirees:

An Interview with
Daniel Biss/ with Commentary, Wednesday, January 22, 2014

Chad Aldeman: First, can
you say why you are interested in pension reform, and what made this bill important?

Daniel Biss: I’m interested in pension reform
because the first two years of my service in the Illinois General Assembly were
years that followed a very significant tax increase and yet saw extremely deep
cuts in discretionary spending to areas of public service that I cared
deeply about, the reasons that I entered public service in the first place. The size of our pension payments was so
large that if we tried to address our budget problems without looking at
pensions, we would be signing ourselves up for deep and never-ending impacts on
the rest of state government. I just couldn’t get to a place where that
seemed acceptable. I sought out changes to the pension system that ultimately
strengthened and preserved it for those who rely on it the most…

[“By far and away, the main
reason the state’s contributions to its pension systems are increasing so much
annually is the unrealistic, heavily back-loaded schedule the legislature set
back in 1995 for repaying the debt the state owes to its pension systems. Of
the $6.19 billion General Fund contribution to the five pension systems for
FY2014, about $1.02 billion is attributable to the normal cost of the benefits
being earned by current workers, while $5.17 billion constitutes debt
repayment” (Analysis of FY2014 Illinois General Fund Budget from the Center for Tax and Budget
Accountability). Furthermore, impairing a constitutional contract does not
“strengthen and preserve it for those who rely on it the most”; breaking a
contract with public employees will not address the revenue and debt problems
in Illinois]…

Aldeman: Am I reading
correctly that the changes apply to legislators? Was that a complicating factor
in the negotiations?

Biss:It
is true. Whatever the bill does for other
pension systems—for state employees, teachers, and state university
employees—the bill either replicates the same policy for legislators or asks
more of them.

[“Leaving the judges out of pension
reform: ‘I would call this buying off the judges…’” (Ann Lousin, a professor at
the John Marshall Law School in Chicago who helped draft the Illinois
Constitution in 1970)]…

Very few of us were prepared to do something like this to teachers, state
workers, and university employees unless
we were prepared to do it to ourselves as well.

[Approximately 80 percent of public
employees have only one pension. How many pensions will the average Illinois
legislator have?].

As an example, in 2010, Illinois created
a new “Tier 2” of benefits for employees hired after January 1, 2011. It’s
a relatively stingy plan. This bill
didn’t change anything for those workers at all. The only exception is that the
bill did have a cut for Tier 2 legislators. I just couldn’t look myself in the
mirror and sponsor a bill that left me off the hook.

[Regarding Tier 2: Illinois legislators
have failed to address the flaws in the newly-hired public employees’ pension
plan. The “Tier 2” benefit structure for employees faces problems because the
benefit is worth less than employees are paying for it. Tier 2 is a looming
issue that must be resolved, but SB 1 will possibly create the same problem for
the Teachers’ Retirement System (TRS) and, likely, the State Universities
Retirement System (SURS)].

Aldeman: One
component of the bill is a gradual increase in the retirement age for current
employees. For example, if an employee is 46 years or older as of June 1, 2014,
they face no change, but if they’re between 45 and 46, their retirement age
will increase by 4 months. The law creates tiers like this, adding four months
to the retirement age a year until the employee is less than 32. Anyone 32 or
younger would have their retirement age increased by 60 months (5 years). What
was the rationale for creating this tiered system?

Biss:This
is probably one of the parts of the bill that feels the fairest to some people.
If you’re close to retirement, moving the retirement age is a lot to ask. If
someone is 59 and planning to retire at 60, changing their retirement age is
changing their life in a really extreme way. On the other hand, telling someone who’s younger, say 40, just
doesn’t seem as much to ask, particularly in a climate where other workers in
the private sector are retiring later.

[“A plain language reading of the
Pension Clause’s text makes clear that governmental entities may not reduce or
eliminate a public employee’s pension payments and other membership
entitlements once the employee becomes a pension system member. At the same
time, the plain language also indicates that an employee’s pension payments and
other membership entitlements are ‘contractual’ rights that may be presumably
altered through mutual assent via contract principles. Further, the Clause’s
prohibitory language against the diminishment or impairment of pension benefits
is cast in absolute terms and lacks any exceptions…” (Eric M. Madiar,Chief Legal Counsel to Illinois Senate President John J.
Cullerton and Parliamentarian of the Illinois Senate)].

I have always felt
you need to protect those close to retirement[But not public retirees?]. In a bill I introduced a year ago, we
had somewhat crude bands. Those bands were larger than what emerged in the
final bill. The bigger bands worked ok, but they unfairly penalized people
depending on when their birthday fell in relationship to the bands. The Senate
Republicans came up with the idea we compromised on. It may be difficult to
write it out, but it’s phased in smoothly and doesn’t make someone say, “I
can’t believe I was born only two days late.” It’s less capricious and
arbitrary. We wanted to phase it in over a reasonable time period while
sheltering those who are close to retirement. However, part of the challenge
for a place like Illinois, because we
have so much debt, is that an unbelievably large portion of our liability is
associated with workers and retirees who are over the age of 60.In other words, the vast majority of our
unfunded liability is to retirees. What this means is that changing the
retirement age just can’t move the needle significantly enough on the cost
side.

We were asked, “How can you possibly touch retirees?” but
once you realize that two-thirds of our liability is associated with people
over the age of 60, it doesn’t seem
plausible to make a significant fiscal change while leaving retirees untouched.

[“The significance of any modification
of the “Pension Clause” is “the extent to which [retirees] will be deprived of
the benefit [they] reasonably expected; the extent to which [retirees] can be
adequately compensated for the part of that benefit [COLA] of which [they] will
be deprived; […and] the extent to which the behavior of the party [Illinois
General Assembly] failing to perform or to offer to perform [or] comports with
standards of good faith and fair dealing… The promise to honor commitments and
pay for the public employees’ pension is of ‘sufficient importance’ to all
citizens of Illinois. To pass pension reform is ‘an unequivocal manifestation
of intention not to perform… legal duties…under a contract… When there is a
duty of immediate performance of a promise, failure to perform in full is a
breach’” (Professor of Law, Emeritus, Claude D. Rohwer and Professor of Law,
Emeritus, Anthony M. Skrocki, Contracts in a Nutshell)].

Aldeman: There’s been
quite a bit of questioning about the legality of the changes. Article XIII,
Section 5 of the Illinois State Constitution says, “Membership in any pension
or retirement system of the State, any unit of local government or school
district, or any agency of instrumentality thereof, shall be an enforceable
contractual relationship, the benefits of which shall not be diminished or
impaired.” The last part, “shall not be diminished or impaired” has been seized
on as prohibiting changes like what’s in this bill. Can you explain the counter
argument for why these changes are legal?

Biss:There
are a number of different arguments. I would lay out two here. First, there is consideration given to the class of
affected individuals in this bill. It is consideration to the class rather than
an opportunity for each individual to renegotiate their contract. For those
still working, their annual contributions will be reduced by 1%.

[No consideration was given to public
employees in Senate Bill 1: reducing the contribution rate for current teachers
by one percent was not a consideration. It was not negotiated; furthermore,
modification of contract principles for retirees was also without consent. “It
is well settled that a contract, once made, must be performed according to its
terms, and that any modification of those terms must be made by mutual assent
and for consideration” (Ross v. May Co., 377 Ill. App. 3d 387, 389 (2007)].

For the entire class, there is a significant new right in the form of
additional funding. The Supreme Court has said the Constitution has protected
the right to a benefit, but we’re also
creating a new right to fund the benefit properly and therefore guarantee its
fiscal health and stability. We’re not only going to an actuarially funding
schedule, we’re going above and beyond that. All of this is money going to the
retirement system and therefore to the employees.

[Illinois legislators who challenge
constitutional contracts can never be trusted. As a matter of fact, according
to Representative Elaine Nekritz: “The so-called pension payment guarantee has
wiggle room. If the state fails to make a pension payment, a retirement system
could file action in the Illinois Supreme Court to compel the state to make the
required payment. But if the state faces a crisis, it could simply vote to
change what the required payment would be; [thus], effectively working around
that guarantee”].

The second argument is simply one of balancing priorities.
The Constitution does include Article XIII, Section 5. But it’s a long
constitution and it includes other things too, such as a free public education
and health and welfare and safety. It’s
very clear that we’ve had to cut spending on things like public education in a
way and to an extent that imperils the quality of our services.

[“… [T]here are those among us who
want to abandon] the fundamental principle that the rules of the game for
contracting parties are not to be changed midstream… This is especially hard to
comprehend when public employees have diligently and faithfully paid their
contributions while their government employers have failed to pay their
required share. Indeed, for decades, states have treated pension systems as a
credit card to pay for government services and avoid tax increases or service
cuts (p. 194)... For lawmakers, it is simply politically more palatable to
unilaterally cut pension benefits for public employees and retirees than to
raise taxes, cut services, or both…” (Eric M. Madiar (2012). Public Pension Benefits
under Siege: Does State Law Facilitate or Block Recent Efforts to Cut the
Pension Benefits of Public Servants? ABA Journal ofLabor & Employment Law, V. 27, no. 2,
179-194. Retrieved December 7, 2012 (Defending and Protecting Public Employees’ Pensions against the
Legislative Siege)].

My expectation would be that the courts decline to rule narrowly
but will recognize that this was an attempt to balance between different
priorities, all of which are important, some of which are statutorily and
others which are constitutionally protected. Though it was a difficult and painful struggle internally, I felt like
the public harm from doing nothing at all was unacceptable to the people of
Illinois. I hope the courts will weigh that seriously and carefully as they
make a determination...

“[Any] attempt to
denigrate the validity of decades of judicial precedents about the binding
nature of legislation establishing pension commitments to government employees
and to motivate state courts to overturn long-settled premises about these
commitments would impose its own, unjustifiable costs. The states and their
instrumentalities have promised pension benefits to their employees; those
employees have relied on those long-standing promises; and as a result the
citizens of the states have benefited from the services provided by those
employees. [In short,] there is no sound public policy reason to conclude that
these promises – based on the reasonable expectations of the contracting
parties – should not be fully protected by the laws prohibiting or limiting the
impairment of contracts” (Greenfield, Douglas L., Lahne, Susan G. (2012). How Much Can States Change Existing
Retirement Policy? In Defense of State Judicial Decisions Protecting Public
Employees’ Pensions. National Council of State Legislatures Legislative
Summit).

“[The Pension Protection Clause was
approved by the Constitutional Convention and ratified by the people of
Illinois. Over the years, the Illinois Supreme Court has had several occasions
to interpret the Pension Protection Clause. The Illinois Supreme Court’s
decisions have been consistent: ‘[T]his court has consistently invalidated
amendments to the Pension Code where the result is to diminish benefits.’ McNamee v. State, 173 Ill. 2d 433, 445
(1996). That is because, under the Pension Protection Clause, the ‘contractual
relationship’ between a retirement system member and the State of Illinois is
‘governed by the actual terms of the Pension Code at the time the employee
becomes a member of the pension system.’ McNamee,
173 Ill. 2d at 439.

“[In a strikingly similar context, the
Illinois Supreme Court also has warned: ‘No principle of law permits us to
suspend constitutional requirements for economic reasons, no matter how
compelling those reasons may seem.’” (Jorgensen
v. Blagojevich, 211 Ill. 2d 286, 316 (2004) (from the 12-page legal
document recently filed by the law firm of Tabet, DiVito & Rothstein on
behalf of the plaintiffs named from the IRTA and IASA)].

[Your oath of office, Senator Biss:
“Each prospective holder of a State office or other State position created by
this Constitution, before taking office, shall take and subscribe to the
following oath or affirmation: ‘I do solemnly swear (affirm) that I will
support the Constitution of the United States, and the Constitution of the
State of Illinois, and that I will faithfully discharge the duties of the
office of…to the best of my ability’” (The Constitution of the State of Illinois,
Article XIII—Oath or Affirmation of Office, Section 3)].

3 comments:

An additional note about Secure Choice Retirement Savings Program in Illinois or a defined-contribution savings plan: it is only a supplementary savings account. Furthermore, a defined-contribution savings plan is not guaranteed for life. The benefit ceases when the account is exhausted. There are no survivor or disability benefits and guarantees. The benefit is based upon individual investment earnings, where one assumes all funding, investment fees, and inflationary and longevity risks. A defined-contribution savings plan does not have the pooled investments, professional asset managers, and shared administrative costs that a defined-benefit pension plan provides.

Every interview, every article, and every legislative session about Illinois public pension reform should begin with these statements: The public pension systems were not, and are still not, the cause of the state’s budget deficits. The state’s budget deficits were triggered by past policymakers’ corruption, arrogance and irresponsibility.

Past Illinois General Assemblies have created the severe unfunded liability for the five public employees’ retirement systems over several decades. The current state government has attempted to isolate and sacrifice one group of people for hardship and, for many of these public employees and retirees, create a dispossession by way of an intentionally-diminishing law while perpetuating special exceptions and windfalls for the wealthy elite. This is a mockery of justice.

Illinois citizens are tired of those members of the Illinois General Assembly who lack ethical responsibility and moral courage; they are also tired of those members who are willing to challenge the State and U.S. Constitutions.

It is critical that the Supreme Court Justices protect legitimate expectations and concerns of those citizens who need to be defended against excessive economic clout and inequitable schemes to pass prejudicial legislation that benefits the financial elite at the expense of everyone else.

"In order to save the pension fund, we had to destroy the pension fund."- D. BissWhy did we lose in Vietnam? Among other things, the above paraphrase I attribute to Sen. Daniel Biss is based upon an anonymous major in Vietnam who said this about a Vietnamese village.The reality is simple. Nothing is saved by destroying it. This is the realm of the bizarre. Biss is actually a toady for the wealthy thieves who wish to bleed the billions of dollars in the funds away from those who are legally owed those funds.

Teacher/Poet/Musician

Copyrights & Fair Use: This blog contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. I am making such material available in my efforts to advance understanding of issues vital to a democracy. I believe this constitutes a “fair use” of any such copyrighted material as provided for in section 107 of the U.S. Copyright Law.

Persona

"I want everything to be explained to me or nothing. And reason is impotent when it hears this cry from the heart. The mind aroused by this insistence seeks and finds nothing but contradiction and nonsense" —Albert Camus (1913-1960).